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Evidence outlined in a Pentagon contractor report suggests that financial subversion carried out by unknown parties, such as terrorists or hostile nations, contributed to the 2008 economic crash by covertly using vulnerabilities in the U.S. financial system.

The unclassified 2009 report “Economic Warfare: Risks and Responses” by financial analyst Kevin D. Freeman, a copy of which was obtained by The Washington Times, states that “a three-phased attack was planned and is in the process against the United States economy.”

While economic analysts and a final report from the federal government’s Financial Crisis Inquiry Commission blame the crash on such economic factors as high-risk mortgage lending practices and poor federal regulation and supervision, the Pentagon contractor adds a new element: “outside forces,” a factor the commission did not examine.

“There is sufficient justification to question whether outside forces triggered, capitalized upon or magnified the economic difficulties of 2008,” the report says, explaining that those domestic economic factors would have caused a “normal downturn” but not the “near collapse” of the global economic system that took place.

Suspects include financial enemies in Middle Eastern states, Islamic terrorists, hostile members of the Chinese military, or government and organized crime groups in Russia, Venezuela or Iran. Chinese militaryofficials publicly have suggested using economic warfare against the U.S

In an interview with The Times,Mr. Freeman said his report provided enough theoretical evidence for an economic warfare attack that further forensic study was warranted.

“The new battle space is the economy,” he said. “We spend hundreds of billions of dollars on weapons systems each year. But a relatively small amount of money focused against our financial markets through leveraged derivatives or cyber efforts can result in trillions of dollars in losses. And, the perpetrators can remain undiscovered.

“This is the equivalent of box cutters on an airplane,” Mr. Freeman said.

Paul Bracken, a Yale University professor who has studied economic warfare, said he saw “no convincing evidence that ‘outside forces’ colluded to bring about the 2008 crisis.”

“There were outside players in the market” for unregulated credit default swaps, Mr. Bracken said in an e-mail. “Foreign banks and hedge funds play the shorts all the time too. But suggestions of an organized targeted attack for strategic reasons don’t seem to me to be plausible.”

Story continues at: Washington Times

The Pentagon’s spy unit has quietly begun to rebuild a database for tracking potential terrorist threats that was shut down after it emerged that it had been collecting information on American anti-war activists.

The Defense Intelligence Agency filed notice this week that it plans to create a new section called Foreign Intelligence and Counterintelligence Operation Records, whose purpose will be to “document intelligence, counterintelligence, counterterrorism and counternarcotic operations relating to the protection of national security.”

But while the unit’s name refers to “foreign intelligence,” civil liberties advocates and the Pentagon’s own description of the program suggest that Americans will likely be included in the new database.

FICOR replaces a program called Talon, which the DIA created in 2002 under then-Defense Secretary Donald Rumsfeld as part of the counterterrorism efforts following the 9/11 attacks. It was disbanded in 2007 after it emerged that Talon had retained information on anti-war protesters, including Quakers, even after it was determined they posed no threat to national security.

DIA spokesman Donald Black told Newsweek that the new database would not include the more controversial elements of the old Talon program. But Jeff Stein at the Washington Post reports that the new program will evidently inherit the old Talon database.

“Why the new depository would want such records while its parent agency no longer has a law enforcement function could not be learned,” Stein reports. “Nor could it be learned whether the repository will include intelligence reports on protest groups gathered by its predecessor.”

The Pentagon’s notice states that the database will collect “identifying information such as name, Social Security Number (SSN), address, citizenship documentation, biometric data, passport number, vehicle identification number and vehicle/vessel license data.” As only US residents have Social Security Numbers, it appears the program is being designed at least partly to contain domestic information.

Newsweek cites two unnamed US officials as suggesting that the new program essentially echoes the old one. When CIFA, the DIA division running Talon, was disbanded in 2008, “many of its personnel and some of its functions were transferred” to the new DIA unit running the new database program. The new program will be housed “in the same office space that CIFA once occupied, in a complex near suburban Washington’s Reagan National Airport.”

Mike German, a former FBI agent now working with the ACLU, says “Americans should be just as concerned” about the new database as the previous one under the Bush administration.

“It’s a little hard to tell what this is exactly, but we do know that DIA took over ‘offensive counterintelligence’ for the DoD once CIFA was abandoned,” he told the Post‘s Stein. “It therefore makes sense that this new DIA database would be collecting the same types of information that CIFA collected improperly.”

Source: Raw Story